Is The Middleby Corporation (NASDAQ:MIDD) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
The Middleby Corporation (NASDAQ:MIDD) was in 29 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. MIDD shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 35 hedge funds in our database with MIDD positions at the end of the second quarter. Our calculations also showed that MIDD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a peek at the key hedge fund action surrounding The Middleby Corporation (NASDAQ:MIDD).
Michael Gelband of ExodusPoint Capital
Do Hedge Funds Think MIDD Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the second quarter of 2021. On the other hand, there were a total of 30 hedge funds with a bullish position in MIDD a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Middleby Corporation (NASDAQ:MIDD) was held by Citadel Investment Group, which reported holding $182.9 million worth of stock at the end of September. It was followed by Select Equity Group with a $101.4 million position. Other investors bullish on the company included Balyasny Asset Management, Royce & Associates, and D E Shaw. In terms of the portfolio weights assigned to each position Jade Capital Advisors allocated the biggest weight to The Middleby Corporation (NASDAQ:MIDD), around 1.5% of its 13F portfolio. Falcon Edge Capital is also relatively very bullish on the stock, dishing out 1.16 percent of its 13F equity portfolio to MIDD.
Judging by the fact that The Middleby Corporation (NASDAQ:MIDD) has witnessed bearish sentiment from the smart money, it’s safe to say that there exists a select few fund managers that slashed their entire stakes last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest stake of the 750 funds tracked by Insider Monkey, comprising an estimated $124.9 million in stock, and Renaissance Technologies was right behind this move, as the fund sold off about $47.6 million worth. These moves are important to note, as total hedge fund interest fell by 6 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to The Middleby Corporation (NASDAQ:MIDD). These stocks are Altice USA, Inc. (NYSE:ATUS), CAE, Inc. (NYSE:CAE), China Southern Airlines Co Ltd (NYSE:ZNH), Newell Brands Inc. (NASDAQ:NWL), Texas Pacific Land Corporation (NYSE:TPL), Life Storage, Inc. (NYSE:LSI), and Cree, Inc. (NASDAQ:CREE). This group of stocks’ market valuations resemble MIDD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATUS | 59 | 1167928 | 15 |
| CAE | 7 | 83687 | -3 |
| ZNH | 3 | 8197 | 1 |
| NWL | 26 | 1635531 | 1 |
| TPL | 24 | 1973702 | 3 |
| LSI | 24 | 326658 | 3 |
| CREE | 21 | 246808 | -10 |
| Average | 23.4 | 777502 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $778 million. That figure was $568 million in MIDD’s case. Altice USA, Inc. (NYSE:ATUS) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 3 bullish hedge fund positions. The Middleby Corporation (NASDAQ:MIDD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MIDD is 47.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately MIDD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MIDD were disappointed as the stock returned 2.4% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Middleby Corp (NASDAQ:MIDD)
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Disclosure: None. This article was originally published at Insider Monkey.
